I have plugged in all of my cables correctly into ZyXEL unit, the first and third light appear, but not the second. I have an Ethernet cable running from the ZyXEL to my Laptop; I have tested the Ethernet cable and it is functional.

I have always accessed my files via the "Show the directory of the NAS" option in the NAS Starter Utility; however, now my status is always showing "Down" [See image 1] and so I can't successfully log in. Sometimes it looks like it is logging me in, but then just directs me to my C: drive documents, not my ZyXEL. Sometimes this comes back online again [for about 10 seconds over an hour], but even when I click on "Show the directory of the NAS" and try to log in, it just momentarily freezes and then says error.

I'm not sure what is happening, but I can only assume some settings have changed (though I'm not sure how). In some ways I think it might be that I have moved from my house to university, and thus my IP has changed. But, this can't be the problem as I have used it before down here. I want to restore the factory default setting, but will this wipe all of the files off of my hard-drive as well, because I don't want that happening!

The IP address of your nas (169.254.29.232) is an APIPA address, which means it doesn't get an IP address assigned by a DHCP server, so it chooses a random one itself. But unfortunately this address is not usable for devices having a 'normal' address.

You connected the NAS to an University network? Maybe you have to talk to the network maintainer. It is possible that he has a whitelist of MAC addresses which will get an IP address assigned, and your NAS is not on it.